What concert workers need to know about a key tax form

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Americans have started filing their 2020 income tax returns. After a tumultuous income year, tax season will not be easy. But for people who are independent contractors, often referred to as concert workers, filing income tax can be even more difficult, even in normal times.

Unlike W-2 employees, concert workers typically report all of their income on Schedule C. Their income is reported and then offset by business expenses. But being a gig worker requires a lot of organizational skills to keep up with all of these moving parts.

And this is where there can be difficulties. Even when gig workers want to report their income, they often don’t know what to do when they don’t get 1099 from the people and companies they worked for. This can be a dangerous minefield that must be navigated properly to avoid the potential consequences of the IRS.

What is a 1099?

When a concert worker accepts an engagement, they must file a W-9 with the employer. This provides the employer with the relevant information, from name and address to tax identification number, which will enable them to declare the wages of the worker together at tax time.

At the end of the tax year, the employer issues a 1099-NEC to the concert worker by January 31. But there are parameters to it.

“A 1099-NEC is issued to concert workers for cash and check payments over $ 600 in a calendar year,” says Nicole Davis, CPA at Butler-Davis Tax & Accounting in Conyers, Ga. . “Payments are reported to the Internal Revenue Service to ensure that concert workers claim all of their earned income on their tax returns.”

What added another layer of confusion to the process was that the shape itself changed. For years, concert workers received 1099-MISC. But in 2020, the IRS changed the form to 1099-NEC. The NEC stands for compensation for non-employees.

What if you don’t get 1099?

“If a gig employee doesn’t get 1099-NEC, then they can contact the client who hired them for the job and request one,” says Davis.

But many are confused when the 1099 does not arrive. They should think about how much income they made from this engagement. If it was less than $ 600, they likely won’t receive 1099-NEC, but they are still required to report the income.

“Concert workers are ultimately responsible for tracking the income they have earned, especially if a 1099-NEC is not issued,” says Davis. “Compliance with the 1099 issue is still a big deal for businesses. ”

The burden is on the Gig Worker

Part of what concert workers like about being independent is that they can make the decision, but with that benefit comes responsibility. It is essential to correctly declare their income in order to create a solid financial life.

While it can be frustrating to have to report all income – including income for which you did not receive 1099-NEC – it is necessary to create a record in the social security system that will determine your retirement benefits. . Plus, by reporting all of your income, you create opportunities to fund retirement plans that will ultimately help you.

Therefore, you must report all income even if you do not get 1099-NEC. In 2021 and beyond, be proactive and make sure that when you take a new position, you ask to fill out a W-9 so that you can get a 1099-NEC in the future. In addition, be sure to track all of your income from your various commitments so that at the end of the tax year you have a clearer idea of ​​whether or not to expect a 1099-NEC from each. employer.


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